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San Jose school district misled state to get $8M in funds, officials say

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A San Jose-area school district provided false information to obtain more than $8 million in state funds for school construction projects, state officials have determined.

Last week, the State Allocation Board sanctioned the Oak Grove School District after concluding that district officials misled Office of Public School Construction reviewers on an application for funds. State rules require a binding contract to be in place for at least 50 percent of the project in order to be eligible for state aid.

In its five applications for funding, Oak Grove certified that it was eligible and that all required contracts were in place. But years later, state reviewers discovered the contracts weren't entered until 2,436 days after Oak Grove received $8.5 million from the state.

State officials said Oak Grove's inaccurate information deprived the state of funds, increased the state's debt burden and gave the district an unfair funding advantage over other school districts. The Oak Grove district consists of 16 elementary schools and three middle schools in San Jose. The district serves almost 11,000 students.

The State Allocation Board is responsible for directing state funding for school construction. The public school construction office carries out the board's mandates and monitors school districts' spending of state aid.

According to the board report on Oak Grove:

The premature fund release also resulted in 1) lost interest during the period of time these funds should have remained in the State bond fund accruing interest and 2) added additional debt service costs to the State. The OPSC's intent is not to unduly penalize any one particular district; rather, the goal is to treat all school districts as fairly as possible.

Chris Jew, acting superintendent at Oak Grove, said the district didn't dispute the board's findings about the construction, which was done in the early 2000s. The state investigation preceded Jew's arrival at Oak Grove.

"I make no excuses as to why the former administration did that," Jew said. "However, I can assure the board as we move forward that we do have processes in place so that stuff like this never happens again."

The State Allocation Board ordered Oak Grove to repay $540,386 to the state and face four years of tighter fiscal scrutiny of its bond spending.

In recent weeks, the state has tightened its oversight of school construction bond spending. The California attorney general's office and county treasurers have issued warning letters to school officials after finding an uptick in school districts using construction bond money to cover day-to-day operations and in other ways that violate state and federal law.

Public school construction officials also accused the Lake Elsinore Unified School District of inaccurate filings to obtain funds. The State Allocation Board ordered the district to repay $5,098 to the state, but rejected harsher penalties because it found the district had largely acted in good faith.

Filed under: K–12, Daily Report

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